In a match made for the cloud, software giant Microsoft is acquiring professional social networking site LinkedIn for $26.2 billion in cash.

By teaming up, the companies aim to connect Microsoft’s more than 1.2 billion users of Office — and its other cloud-based offerings —with LinkedIn’s 433 million-plus mobile-friendly members in ways that transform the workplace.

LinkedIn's news feed will be smarter, since your Microsoft Office calendar will know what's coming up on your schedule, said Microsoft CEO Satya Nadella. And the Office software suite will have LinkedIn's training courses on programs such as Excel, Word and PowerPoint baked in, he said.

In a more futuristic vision, Nadella foresees Microsoft's artificial intelligence assistant Cortana serving as your networking caddy. "Imagine you are walking into a meeting and Cortana now wakes up and tells you about the people you are meeting for the first time ... (and) tells you all the things you want to know before walking in and knowing someone because it has access to the professional network," he said.

Microsoft likely sees the potential of connecting its Office Graph intelligent workplace collaborative platform with LinkedIn's network, says TJ Kiett, a senior analyst with research firm Forrester. "This is a data play in many respects. In the enterprise market, Microsoft wants to create a new platform for work that makes it easier for employees to collaborate and get things done," he said. "LinkedIn, with its profiles, groups and connections, is ideal."

The acquisition of LinkedIn would be Microsoft's largest ever; the deal values LinkedIn at $196 per share, representing a 49.5% premium over Friday's closing price.

Several LinkedIn shareholders netted a healthy windfall Monday on the soaring stock price. LinkedIn founder and chairman Reid Hoffman, who holds nearly 14.5 million shares in the company, saw his stake increase by about $1.1 billion to $2.8 billion. (He had seen it swoon in February when LinkedIn shares plummeted 44% to $108.38 on Feb. 5.)

The Mountain View, Calif.-based company lost about $10 billion in market cap after issuing a lower-than-expected revenue forecast for its fiscal 2016. Since then, LinkedIn has increased that forecast to a range of $3.65 billion to $3.7 billion, nearing the $3.73 billion expected by analysts polled by S&P Global Market Intelligence.

Another recent hindrance for LinkedIn: the social networking company contacted as many as 100 million members suggesting they update their passwords when a database of LinkedIn emails and passwords from a 2012 breach were spotted for sale online by hackers.

While Microsoft is paying a premium for LinkedIn, the software giant should gain from the acquisition, says Mizuho Securities analyst Neil Doshi. "This transaction makes sense to us. We've always considered two potential acquirers for LinkedIn -- Salesforce or Microsoft," he said in a note to investors Monday.

The deal not only helps Microsoft in the office, but also on social media, he says. "Microsoft has fallen behind in the consumer Internet sector, and this deal gives Microsoft 433 million social LinkedIn members that is growing," Doshi said. "Just as important, 60% of LinkedIn users are on mobile, and this should accelerate Microsoft's consumer 'Net mobile presence."

As for LinkedIn — besides the hefty payout — it stands to expand its recruiting, advertising and sales programs though Microsoft's extensive business and consumer connections. Microsoft's Outlook.com alone has 400 million active users and Microsoft Office has been downloaded 340 million times on Android and iOS devices, according to Microsoft. "We believe that LinkedIn can leverage Microsoft's scale across all three solutions," Doshi said. "In addition, LinkedIn can leverage Microsoft's cloud infrastructure and engineering talent to become more aggressive in all three areas that it operates."

LinkedIn has sought to evolve itself, last year acquiring online learning site Lynda.com last year for $1.5 billion. Three months ago, LinkedIn launched 50 online learning paths to help job seekers improve their skills.

"LinkedIn is a highly strategic suite of enterprise productivity tools and perhaps the go-to destination for B2B marketing on the Internet," said Scott Devitt, internet equity research director for investment banking firm Stifel. Devitt had a Buy rating with a target price of $180 for LinkedIn in his most recent note to investors.

BOARD APPROVAL

The companies said their respective boards had unanimously approved the deal. LinkedIn CEO Jeff Weiner will keep the title and report to Microsoft Nadella.

Nadella and LinkedIn CEO Weiner said they had been brainstorming a collaboration for some time. "I am a deep believer in productivity tools and communication tools because that is what empowers people to be able to be great at their job," said Nadella, who in a video with Weiner posted on Microsoft.com said that he is a LinkedIn user who publishes on the platform. "But think about taking that and connecting it with the professional network and really having that entirety of what is your professional life be enhanced, more empowered, where you are acquiring new skills and being more successful in your current job and finding a greater bigger next job. That’s that vision."